LeEco Acquisition of Vizio for $2 Billion Abandoned

LeEco and Vizio

Due to regulatory issues, the deal whereby Chinese tech company LeEco was going to acquire Vizio is off. I’m posting this a day late because I didn’t get a press release from my usual contact. Instead, I ran into this news browsing the New York Times while sipping coffee.

LeEco had planned to purchase Vizio for $2 billion, but per the Times article, it backed out and blamed “regulatory headwinds” for the change in course. AT CES 2017 in Las Vegas, the company had discussed ambitious plans to disrupt the U.S. market with disruptively priced TVs and other products including an electric car, a high-tech bicycle, phones, and more.

Whatever the reason for the change in plans, this is probably a good thing for Vizio. Reading up on LeEco’s recent history of growth in the New York Times article reveals a company run by its mercurial founder, Jia Yueting, who perhaps is not familiar with the Greek myth starring Icarus. Apparently, the company expanded into a wide variety of businesses—big budget movies, online finance, broadcasting sports, etc.—and basically ran out of cash.

Cash problems may be the reason for the about-face. The Times piece notes that “It is not clear whether LeEco’s retreat on Vizio was related to its financial problems. Chinese officials, worried about money moving out of the country, have grown skeptical of some foreign acquisitions, even as they welcome others.” – Ryan McMorrow, New York Times

It’s not clear how the death of this deal will affect the respective plans of Vizio and LeEco when it comes to selling TVs in North America. LeEco’s most interesting product is the gigantic uMax85, an 85″ HDR TV that is shockingly well equipped considering its price, with $5500 getting you Dolby Vision HDR, 448 FALD zones, and Harman Kardon sound.

Meanwhile, Vizio has already stated that it will not update its P series Home Cinema Displays in 2017. It’s not clear what that means for the popular M series, but I will be in New York two weeks from now, to check out the company’s 2017 products at an invitation-only press event.

Anyhow, the main news here is the “LeEco to Acquire Vizio for $2B” deal is dead, a reminder that not all corporate acquisitions go as planned.